Non-Forfeiture Options in Life Insurance Explained

Reduced paid-up insurance and your other choices

For a whole life policy with sufficient cash value, nonforfeiture options may help when you cannot continue premiums. Cash surrender ends coverage and pays the available surrender value. Reduced paid-up insurance uses available value to continue a smaller amount of permanent coverage without further premiums. Extended term insurance uses that value to provide coverage for a limited period. These choices differ from buying paid-up additions or completing a limited-pay policy's original premium schedule. Before stopping payments, ask your insurer for each available option's actual death benefit, coverage duration, treatment of outstanding loans, and effect on riders. Your contract determines eligibility and available choices. The New York Department of Financial Services explains these nonforfeiture terms.